Back to top

Analyst Blog

In accordance with the Volcker Rule, Citigroup Inc. (C - Analyst Report) is in the final stages of spinning off an internal hedge fund unit, which it independently renamed as Napier Park Global Capital. The unit was previously managed by the bank’s Citi Capital Advisors (CCA) division.

The company has already obtained a regulatory approval for the spin-off. However, it is yet to receive a green signal form the investors and counterparty. Upon completion of the spinout, Napier Park is projected to have $6.8 billion in assets under management.

Earlier in 2012, Citi announced that it would branch out CCA with 75% of its stake going to the unit’s management and employees. Out of this, 25% will be in the hands of the co-heads of CCA, James O’Brien and Jonathan Dorfman, whereas the remaining will be under the employees. Citi will hold only 25% stake in the independent company. Providing managers a stake in the new firm is anticipated to offer increased motivation to earn better returns.

CCA’s hedge funds traded on several risky assets, including European loans, complex credit instruments, municipal bonds, mortgage-backed securities and the debts of struggling companies. Accordingly, Citi had almost $2.5 billion invested in the funds. Thus, the company is looking to steadily shed these assets to comply with the Volcker Rule, which restricts banks from trading on their own.

Citi currently carries a Zacks Rank #3 (Hold). Other major banks that are performing well include BankUnited, Inc. (BKU - Analyst Report), Fifth Third Bancorp (FITB - Analyst Report) and Regions Financial Corp. (RF - Analyst Report). BankUnited carries a Zacks Rank #1 (Strong Buy) and the other two hold a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%